Trump Orders Reviews of Dodd-Frank Liquidation Authority, SIFI Designation

President Trump today ordered the Treasury Department to conduct reviews of the Dodd-Frank Act’s Orderly Liquidation Authority and its process for designating nonbanks as systemically important financial institutions.

The OLA memorandum calls for a review of whether OLA is consistent with the president’s “core principles” for regulating the financial system, whether employing OLA could cause losses to taxpayers, whether it leads to excessive risk-taking and whether a new chapter in the Bankruptcy Code would be a superior method of resolving a failing financial firm, among other topics.

The second memo calls for Treasury to review the Financial Stability Oversight Council’s processes for designating nonbank SIFIs and to pause any further designations of nonbanks pending completion of the review. Both reviews are to be completed within 180 days.

“The American Bankers Association has welcomed and embraced the administration’s thorough review of financial regulations,” said ABA EVP Wayne Abernathy. “We appreciate the administration’s efforts to understand how financial regulations are working in practice and how to refine them to make them more supportive of economic growth. ABA and our member banks are actively participating in the process.”